Yesterday the Head of Yerevan Office of the World Bank Aristomene Varudakis and the director of the regional office of the International Financial Corporation (IFC) Thomas Lubec held a press conference to elucidate the journalists that during the upcoming 4 years totally 670-700 million USD will be allotted to Armenia. The WB Board of Directors made the decision after discussing for two days the WB "Country Support Strategy" with Armenia, which is aimed at mitigating the impact of the crisis for the needy and support Armenia by restoring stable economic development and having a more competitive, diversified economy. According to him, the World Bank will issue $545mln credit to Armenia under the program for 2009-2012, which is twice more than in 2004-2008. Varudakis said $150mln will be issued to Armenia as International Development Association (IDA) credit on favorable conditions, while $395mln will be issued on conditions of the International Bank for Reconstruction and Development for states with average revenue. Besides, Varudakis noted the International Financial Corporation, as member of WB Group will assign an additional $120-160mln as credit or participation in capital of private companies. Varudakis specially mentioned that Armenia’s status as a loan-taker has been changed. “Due to the past year now we have deserved the right to benefit from the opportunity of reducing poverty in Armenia by 50%,” he said. It turns out that we already benefit from this right. Only 150 million is an advantaged credit. Let us mention that the WB this year will allot another 65-70 million USD to Armenia. He said that a more diversified economy will be less dependent on separate economy sectors, such as construction and foreign transfers and will ensure flexibility towards international shocks. According to him the strategy is aimed at liquidation of the main vulnerable factors caused by the world crisis and provides for assigning budget credits to the Government for implementation of complex reforms, namely in the sector of management of healthcare and education as well as of improvement of management in tax authorities. As part of strategy, a part of the means will be assigned to commercial banks of Armenia for issuing credits to small and medium businesses which will contribute to activation of economy and will enable to carry out investments and create jobs. The other aim of the assistance to Armenia is improving its competitiveness and preparing it for economic growth after the crisis. At the same time the World Bank intends to make investments in transport infrastructures for reducing transport expenditure as well as in energy sector for improving energy-supply and reducing loss of energy in the network. Varudakis said WB will also assist reforms aimed at improving business atmosphere and ensure modernization of organs collecting tax incomes. Since 1992 the World Bank has issued a total of $1.2bln credits to Armenia. In the words of Thomas Lubec besides crediting the WB will also provide certain analytical and consulting services. In other words besides poverty reduction the strategy of the WB has a goal to build a competitive economy in Armenia. Varudakis is sure that this is exactly what will happen. Although it is not quite clear how it will be possible to build less corrupt and competitive market by building new roads and irrigation systems. Let us also mention that the WB and the Russian loans create perfect opportunities for “swallowing money.” On the other hand, indeed we cannot clearly insist that what the WB says and forecasts is similar to the state and the average citizens of Armenia. For instance, during the last years the RA economy, by the WB estimations, has registered a bright growth (quoted from the WB release). And Armenia has withstood the global crisis from “fortified positions.” The World Bank (WB) forecasts a 9-9.5% economic decline in Armenia in 2009 and a 1.5-2% economic growth in 2010. Varudakis stated that Armenia’s economy is falling and a 9-9.5% annual decline is expected to be recorded at the end of this year but he expressed a hope the situation will improve and a 1.5-2% economic growth will be recorded in 2010. He noted that according to the forecasts the economic growth will accelerate, though definite indicators will depend on situation in the world. In January-April 2009 a 9.7% economic decline was recorded in Armenia against the corresponding period of 2008. According to the program of the Central Bank of Armenia on money and credit policy a 5.8% economic decline is expected in Armenia in 2009. At the same time, the International Monetary Fund has revised its forecast on economic decline in Armenia to 5%. During the press conference the guests also spoke about the new tax package of Armenia. Varudakis said that he wouldn’t like to comment on something that is still in the stage of a discussion. Later he added they didn’t approve this package but later corrected his words by saying that they didn’t participate in the process of the elaboration of the package. Nevertheless, they don’t think it’s a good idea to have a permanent tax inspector at some company. “The motive of the international practice is that the communication between the entrepreneurs and tax inspectors is brought to minimum so that corruption risks are minimized,” said Varudakis. He informed that in the US this practice is applied for certain major companies but the US has a developed tax system. Moreover, tax inspectors don’t have too many powers. They are implementing operative functions. According to Varudakis this practice was applied in other less developed countries but didn’t bring any use. This is one of the few cases when the WB at least indirectly criticizes the RA government. As we all know usually this structure speaks positively about the Armenian government. Meanwhile Varudakis said a few positive words about the anti-crisis policy of Armenia. But the anti-crisis steps of the RA government are only limited by asking for money from various international structures. If the WB representative means the same steps then we can at least disagree with him.
